Terrestrial ecosystems are becoming increasingly nitrogen-saturated due to anthropogenic activities, such as agricultural loading with artificial fertilizer. Thus, more and more reactive nitrogen is entering streams and rivers, primarily as nitrate, where it is eventually transported towards the coastal zone. The assimilation of nitrate by coastal phytoplankton and its conversion into organic matter is an important feature of the aquatic nitrogen cycle. Dissolved reactive nitrogen is converted into a particulate form, which eventually undergoes nitrogen removal via microbial denitrification. High and unbalanced nitrate loads to the coastal zone may alter planktonic nitrate assimilation efficiency, due to the narrow stochiometric requirements for nutrients typically shown by these organisms. This implies a cascade of changes for the cycling of other elements, such as carbon, with unknown consequences at the ecosystem level. Here, we report that the nitrate removal efficiency (NRE) of a natural phytoplankton community decreased under high, unbalanced nitrate loads, due to the enhanced recycling of organic nitrogen and subsequent production and microbial transformation of excess ammonium. NRE was inversely correlated with the amount of nitrate present, and mechanistically controlled by dissolved organic nitrogen (DON), and organic carbon (Corg) availability. These findings have important implications for the management of nutrient runoff to coastal zones.